Cellular phone plans can be confusing and using your own US or Canadian cell phone can be expensive. Using hotel phones to call home is expensive and relying on pay phones can be difficult.
For more information about the kind of phone you'll need, see Europe Travel's article, Buying the Right GSM Cellular Phone for Europe.
One easy solution is to purchase a SIM card for use with an unlocked GSM cell phone or renting and buying an unlocked GSM cell phone and prepaid SIM card from Cellular Abroad. You'll have a local Italian number for calls in Italy, free incoming calls, and a fixed low rate for calls to the United States or Canada. All the menus are in English and there's 24 hour a day service in English as well. They even include foreign adapters for the charger.
Phone cards come with a small prepaid initial credit. (In spring 2008, the phone came with 4 euro of initial credit, enough for 11 minutes of calling time to the US or 23 minutes in Italy.) If you know you'll be using the phone a lot, you can buy additional prepaid time directly from Cellular Abroad when you place your order. You can also easily add time when you're in Italy. If you're traveling to other countries, you can purchase SIM cards for them as well.
Cellular Abroad phones use UNO Mobile service. When I used this service I was able to get reception everywhere I went except in very remote areas. Best of all, when I called the United States, phone reception was very clear, much better than calling from a land line phone.